201Lec03 - 201Lec03.PPT The Accounting Information System...

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The Accounting Information System Collects, organizes and processes transaction data Transaction is an event that results in a change of a balance sheet item. Typically it is an exchange. (Asset, liability, stock, revenue or expense for one another.) 201Lec03.PPT 1
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Step 1 : Accumulate facts. Step 2 : Determine effects on accounting equation Note: Algebra requires that you keep the equality! Steps in transaction analysis: Steps in transaction analysis: Steps in transaction analysis: Steps in transaction analysis: 2
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Transaction Analysis Transaction Analysis Two or more Two or more items will always be affected Example: (1) Owner invested $10,000 Cash in exchange for $10,000 of Common Stock Two or more Two or more items will always be affected Example: (1) Owner invested $10,000 Cash in exchange for $10,000 of Common Stock 3
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Example: Example: (2) Borrowed $5,000 by issuing a bond. (2) Borrowed $5,000 by issuing a bond. Example: Example: (2) Borrowed $5,000 by issuing a bond. (2) Borrowed $5,000 by issuing a bond. (2 ) + $5,000 + $5,000 ________ $15,000 = $5,000 +$10,000 Bonds Payable 4 Transaction Analysis Transaction Analysis
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TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples Business buys a computer, paying cash. _________ Increase and _________ Decrease Business provides service to a customer and is paid cash. ________ Increase and _________ Increases Employee works and business pays cash for wages. ________ Decrease and _______ Decreases 5
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TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples Business takes out an advertisement that runs today in the newspaper and charges the cost to the credit card. __________ Increase and __________ Decreases Business pays off credit card . _________ Decrease and _________ Decrease 6
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TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples TRANSACTION ANALYSIS examples Business provides services to a customer but allows them 30 days to pay. ________ Increase and ________ Increases 30 days later customer pays off amount due in full. _________ Increase and ________ Decrease Business pays cash dividend to Owners. _________ Decrease and ________ Decreases 7
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Records increases and decreases for a specific Asset , Liability , or Stockholders’ Equity item. Number of accounts used depends on facts and personal desires of the accountant & management. How much detail do they want on
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201Lec03 - 201Lec03.PPT The Accounting Information System...

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